From Silicon Valley, A Modest Proposal for Saving America

Wednesday Aug 24th 2011 by Mike Elgan
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Older US industries are losing in the new globalized economy, yet Silicon Valley giants like Apple and Google are winning hugely. Why?

While America is turning into a rustbelt ghost town, Silicon Valley is a gold-rush boom town.

While older American industries are taking a beating in the new globalized economy, Silicon Valley giants like Apple and Google are destroying their Asian, European and even Canadian competitors.

Maybe it’s time for Washington to stop bickering with itself and start listening to Silicon Valley.

Where Googles Come From

When computer science PhD students Larry Page and Sergey Brin first launched the Google Search engine in 1996, they did so from a dorm room on the Stanford University campus. Within a year or two, the site became a huge hit, at least among geeks, consuming up to half the university’s T3 line.

At the time, there was no way the two impoverished students could have afforded that kind of bandwidth. Google may never have happened without access to high-bandwidth Internet access.

When Mark Zuckerberg launched “The Facebook” in 2004, he relied heavily on Harvard’s fast and reliable Internet connection to handle rapid growth.

Fast, high-bandwidth Internet connectivity is the new garage. While Silicon Valley technology startups used to originate in garages (HP, Apple, etc.), the new ones start at college campuses because they tend to offer subsidized T3 lines to students.

Why We Need Fiber, Not Asphalt

When talking-head politicians talk about repairing crumbling infrastructure, everybody nods in agreement. Nobody likes to see potholes and cracked bridges and declining infrastructure.

But that stuff all happens when we have the money. We’ll have the money if we have a thriving economy. We’ll have a thriving economy if we invest in the future.

Over the next 20 years, an enormous number of new jobs will be created by new startups that offer their services online. Those jobs will be created primarily in Asia, where governments are investing in super-fast Internet connectivity, or they will happen in the United States if we do the same.

This fact presents an enormous opportunity, because the costs and risks of such businesses can be far lower than brick-and-mortar businesses, because you need to invest in neither brick nor mortar.

President Obama is expected to announce after Labor Day a new plan for addressing the plight of the chronically unemployed. Obama’s spokesman says the plan will include “reasonable ideas” that have a “tangible impact.”

Translation: The plan will include politically safe ideas that help with the upcoming election.

This is why the plan will fail. It’s about beltway politics, rather than preparing America to lead the 21st Century.

The reason politicians tend to oppose good ideas for investing in the future is that they fear efficient new businesses might threaten the inefficient existing companies that line their pockets with campaign contributions.

Since the $787 billion stimulus package was passed by Congress in early 2009, the official unemployment rate has grown from 8.1 percent to 9.5 percent.

Whether the stimulus succeeded in preventing much higher unemployment, or failed to bring it down is a pointless argument. The biggest problem is the chronically unemployed, the un-hirable millions.

The longer people are unemployed, the harder it is for them to find work. Now many big firms aren’t even willing to interview people who don’t already have jobs.

And that’s why the government should focus on startups. Instead of hoping that existing companies hire the chronically unemployed, which they probably won’t do even in a strong recovery, the focus should be on new companies launched by those same unemployed millions.

Obama’s jobs council will hold public forums Aug. 31 and Sept. 1 to come up with ideas for how to spend a second round of stimulus funds.

The best idea for achieving the president’s stated goals is already being implemented. By Google.

Google’s Google Fiber for Communities project is an experiment to see what happens when cities have crazy-fast Internet access. How fast? Try 1 gigabit-per-second speeds – about 100 times as fast as the average American has access to.

The first recipient of this subsidized fiber will be Kansas City, Kansas, which was selected out of 1,100 cities, many of which lobbied hard to get the service.

 

Why did they lobby so hard? Why did one mayor swim with sharks to entice Google fiber? Because these local leaders know that fast fiber would stimulate serious job growth.

Part of Google’s project involves experimental techniques for providing fiber services, including a “micro-trenching” contest to see who could invent the best system for digging cable trenches.

By partnering with Google, the US Federal Government could take advantage of the brilliant thinking and entrepreneurial approach that Google has already exhibited.

But by funding not just one city, but hundreds, a fiber project could retro-fit American telecommunications to reap the following benefits:

• Enable unemployed Americans to start their own small businesses with a bandwidth advantage over other global competitors.

• Facilitate telecommuting, which makes companies more efficient, enables people to earn less but live better because they can live in less expensive areas.

• Enable companies (like Google, actually) to invent radically better services for small businesses, thus giving them a boost.

• Make the United States a better place for American and foreign companies to invest, and build offices and factories.

• Enable an entirely new class of technology startups that aren’t possible given today’s slow, unreliable Internet connections to homes.

• Provide employment for thousands of people needed to dig the trenches and lay the fiber.

Note that fast fiber facilitates all kinds of new businesses, not just tech startups. People can teach music or cooking lessons via Google+ to anyone in the world, sell their home-made foods and products and market them with high-quality video around the world and generally compete in the global marketplace with the advantage of gigabit Internet connectivity.

Laid-off executive assistants can become virtual assistants for executives worldwide. Older workers can offer their long experience to startups as consultants. The implementation of Google’s Fiber for Communities project nationwide opens up thousands of new possibilities for the chronically unemployed to work for themselves and simultaneously help re-invent the economy.

This investment in startups could be bolstered by other initiatives, such as microloans for startups, educational grants for schools and colleges teaching entrepreneurship and other initiatives.

Once fast fiber and a focus on startups jump-starts the American economy by turning the nation into one giant Silicon Valley, then we’ll have the money to fix the bridges and pave the roads.

And who knows? Maybe one of these new startups will become the next Google.

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